Force Majeure Lease Provision Didn’t Excuse Non-Payment of Rent During Pandemic — C.A.
By a MetNews Staff Writer
The First District Court of Appeal has affirmed a summary judgment in favor of a landlord in an action for back rent, rejecting the lessee’s contention that his performance during the COVID-19 pandemic was excused under a force majeure provision in the lease.
“The trial court correctly interpreted the force majeure provision here not to apply where the tenant had the ability to meet its contractual obligations but chose not to perform due to financial constraints,” San Francisco Superior Court Judge Christine Van Aken, sitting on assignment, said in an opinion for Div. One. It was filed April 3 and certified for publication on Friday.
From March 20 to May 18 of 2020, the tenant, Stone Brewing Co., LLC, was forced by government orders to shutter its restaurant/pub in downtown Napa, and for substantial periods after that, was subjected to various restrictions, precluding it from making a profit. The lessor, West Pueblo Partners, LLC, brought an action in unlawful detainer.
Wording of Lease
Napa Superior Court Judge Victoria D. Wood rejected Stone’s defense which was based on this provision of the lease:
“FORCE MAJEURE. If either Party is delayed, interrupted or prevented from performing any of its obligations under this Lease, and such delay, interruption or prevention is due to fire, act of God, governmental act or failure to act, labor dispute, unavailability of materials or any cause outside the reasonable control of that Party, then the time for performance of the affected obligations of the Party shall be extended for a period equivalent to the period of such delay, interruption or prevention.”
Stone took possession of the premises in January 2018. It paid no rent for the months of December 2020 through March 2021; West Pueblo served a five-day Notice to quit or pay rent; Stone did neither. West Pueblo filed an unlawful detainer action against Stone on April 6, 2021; Wood ruled in favor of the lessor on Oct. 20, 2021, on a motion for summary judgment.
Van Aken’s Opinion
In her opinion affirming the trial court decision, Van Aken said:
“Although a force majeure provision is often included in a contract to specify which qualifying events will trigger its application, the qualifying event must have still caused a party’s timely performance under the contract to ‘become impossible or unreasonably expensive.’….
“As applied here, Stone’s ability to pay rent must have been ‘delayed, interrupted, or prevented’ by COVTD-19 because timely performance would have either been impossible or was made impracticable due to extreme and unreasonable difficulty. There is no triable issue of fact as to this issue because Stone admitted that it had the financial resources to pay rent to West Pueblo for the subject months, even though the brewpub (a small component of Stone’s overall business) was operating at a loss. The mere fact that Stone was generating less revenue during this time period did not render its performance impossible or impracticable, and the force majeure event therefore did not impair Stone’s ability to pay its rent. Stone merely argues that the force majeure event made it more costly to do so.”
The jurist declared:
“Based on the plain meaning of the force majeure provision and the undisputed material facts in this case, the COVID-19 and the related closure orders did not delay, interrupt, or prevent Stone’s timely performance under the lease.”
Van Aken was not impressed by non-California cases cited by Stone, and found “more persuasive” the Court of Appeal opinion handed down on Jan. 20 by the Fourth District’s Div. One in SVAP III Poway Crossings, LLC v. Fitness International, LLC which rejected a fitness club’s insistence that the doctrine of force majeure excused its nonpayment of rent. Justice Martin Buchanan wrote:
“[T]the trial court properly concluded that the obligation owed by Fitness was the payment of rent. There is no evidence or argument before us that the pandemic and resulting government orders hindered Fitness’s ability to pay rent.”
Buchanan also said:
“Fitness contends that the defense of impossibility applies here because the government closure orders made it illegal for it to operate its fitness facility. But…Fitness’s obligation under the lease was to pay rent, not to operate a fitness facility. The government closure orders did not make it illegal for Fitness to pay rent.”
Van Aken’s opinion came in West Pueblo Partners, LLC v. Stone Brewing Co., LLC, 2023 S.O.S. 1283.
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